The Importance of Security for Open Banking

The recent report by the Competition and Markets Authority’s (CMA) has announced significant reforms that are aimed at shaking up the banking industry. The Open Banking report, promises more transparency for UK banking consumers, open APIs and easier account switching.

These initiatives are welcomed by the Fintech industry, as they intend to increase competition, whilst helping customers obtain a better deal from their banks.

This report, which was widely covered in national and trade media, shares similar themes to the upcoming Second Payments Services Directive (PSD2), and follows a trend towards developing a new-look banking system.

However, whilst such initiatives and reports often focus on increased data sharing between different entities, it is potentially worrying to see security being given such little airtime in this. Every day we see more instances of data breaches whereby mass amounts of consumer data, often sensitive financial information, is exposed.

As part of the measures which the CMA report seeks to bring in, consumers will need to provide all of their transaction information to third party providers, in an effort to find them the best possible deal. But, do we really feel comfortable with another party seeing all the transactions that we make? What if this information goes into the wrong hands, inevitably such information can be used by criminals to carry out fraudulent activities?

Consumers are now increasingly carrying out financial transactions using their mobile phones, whether that is using their online banking services, paying for a taxi or buying goods online. While this has been hugely convenient for consumers, which has resulted in increased levels of revenue for companies, the industry needs to tread carefully when considering data sharing. Failure to appropriately safeguard such data, could result in greater instances of data breaches, and damage the trust which consumers have in businesses and banks.

Solutions like MYPINPAD’s are already leading the way in security by using the cardholder PIN for devices such as mobile phones and tablets; combining first class security practice, user experience and technology to empower the consumer.